By Colum Lynch

Last year, John R. Bolton, then U.S. ambassador to the United Nations, recruited Mark D. Wallace as the U.S. representative for U.N. management and reform. Given that Bolton was a longtime critic of the U.N. bureaucracy, no one expected that Wallace would go meekly about his new job.
And he didn't. He has met with informants eager to spill bureaucratic secrets, scrutinized internal audits and butted heads with U.N. officials he suspects are blocking his efforts to uncover corruption in development programs in places including North Korea and Burma.

Bolton is now long gone, and while Wallace's mission has not changed, U.S. diplomacy at the United Nations has a decidedly different cast. Wallace's continued prosecutorial zeal is roiling sensibilities at a time when the United States is trying to put a more conciliatory face on its diplomacy and persuade the organization to play a larger role in Iraq. Wallace's actions have also prompted allegations from U.N. officials that he may have exaggerated his findings.

The new U.S. ambassador to the United Nations, Zalmay Khalilzad, has struggled in recent weeks to prevent Wallace's probe from triggering a larger public battle between the United States and the United Nations. Last week, he stepped in to defuse a standoff between Wallace and the U.N. Development Program's associate administrator, Ad Melkert. Wallace and Melkert have clashed repeatedly over the investigation. "We're not interested in a public argument," Khalizad has said.

"My sense is Khalilzad's whole mission is to try to change the tone of the U.S. relationship with the United Nations," said William H. Luers, president of the United Nations Association. Wallace's approach, he said, runs "contrary to everything he is doing."
Wallace, who declined to be interviewed on the record, has charged the Development Program with violating U.N. rules barring the hiring of government-selected workers, funding its operations with foreign currency and serving as "a large source of hard currency" for the North Korean government. He has also asserted that the office channeled millions in illicit funds to North Korea, including for the purchase of luxury real estate and high-tech equipment in violation of U.S. licensing requirements.

Wallace's anti-corruption crusade has fired up American conservatives and earned praise from his old boss, Bolton, who has called for Melkert's resignation.
But Wallace has also drawn criticism from U.N. officials and foreign delegates who charge he has hyped his findings and in a manner that has drawn comparisons to the U.S. claims of Saddam Hussein's weapons of mass destruction. For their part, U.N. development officials claim that Wallace's inquiry has led to a string of unsupported "wild" allegations against the U.N. agency.

Wallace began scrutinizing the North Korea development program last summer, after receiving tips that it was withholding information about North Korea's counterfeiting of U.S. currency. Program officials initially denied they had any knowledge of counterfeiting. But after six months of U.S. prodding, the agency finally acknowledged that $3,500 in counterfeit bills were stored in a U.N. safe in Pyongyang.

U.S. officials maintain that the program's response set a pattern in which the agency would withhold evidence until confronted with proof. They have also accused Melkert of threatening in a phone conversation with Wallace to retaliate against the United States if it continued to pursue its inquiry of his agency.
Melkert has denied threatening the United States and challenged the allegations of improper transactions with North Korea, questioning the authenticity of documents Wallace has cited as evidence of the improprieties. And an agency spokesman said that while the Development Program's handling of the counterfeiting allegations was "sloppy," there is no evidence of any wrongdoing by its staff.

Wallace recently expanded his investigation into the development program in Burma, and he has pressed for the appointment of an independent investigator to look into the agency's operations. He sought authority to challenge the agency's contention that it has done nothing wrong in a public briefing with reporters.

But Khalilzad has pressed for a more diplomatic approach, instructing his staff to resolve the matter behind closed doors. He also met last week with the development agency's administrator, Kemal Dervis, to try to reach an agreement to keep the issue out of the headlines, according to U.S. and U.N. officials. "They agreed to lower the temperature in terms of the public nature of the dispute but to continue to pursue efforts to get to the bottom of all allegations," agency spokesman David Morrison said.

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